Autumn is the time for football, harvest festivals and, of course, reviewing your veterinary practice’s 401(k) plan. Secure Act 2.0, signed into law in 2022, is still implementing changes and options for employer retirement plans this year and next. Whether you are considering a first-ever retirement plan, thinking about upgrading from a SIMPLE IRA to a 401(k), or wanting to ensure your current 401(k) is compliant and meets your business’s needs, ask yourselves these five questions:

1. Should My Practice Start a Retirement Plan?

For many businesses with no prior retirement plan and fewer than 50 workers, expanded tax credits lower the cost of entry for employer-sponsored plans, including:

• Startup expense credit: $250 annually per nonhighly compensated employee (up to $5,000 for three years).
• Employer contributions: A tax credit of up to $1,000 per employee earning less than $100,000 a year. Employers with 50 to 100 workers get a reduced credit.
• Automatic employee enrollment: $500 credit for three years.

Note that a tax credit — a dollar-for-dollar reduction in the tax you owe — is far more valuable than a tax deduction. Tax credits eliminate most, if not all, of the upfront setup costs of a 401(k) plan. If you’ve been thinking about offering a 401(k), now may be the time.

2. Should I Upgrade Our Retirement Plan?

Perhaps your veterinary practice offers a SIMPLE IRA. Now might be the time to switch to a 401(k) if:

• You and your employees are nearing IRS contribution limits and want to invest more for retirement.
• Your practice’s revenue and profits are increasing.
• You need additional business tax deductions.
• You’re looking for ways to recruit, reward and retain top talent.

While you can change from a SIMPLE IRA to a 401(k) midyear, the cleanest time to do it is Jan. 1. See the table below for a comparison.

3. Have I Considered Auto-Enrollment?

Automatic enrollment is a growing 401(k) trend and is required for new plans starting in 2025 and beyond. Plans with auto-enrollment set eligible employees at a contribution rate of 3% to 10% if they do nothing. Employees can opt out of the plan or choose a different contribution.

Automatic enrollment drives employee participation and encourages saving for retirement. Often, it pairs with an annual rate escalation — usually by 1% until participants reach 10% to 15% of their compensation. Enrollment can be seamless administratively when the 401(k) and payroll system communicate with each other.

In addition to promoting employee participation and retirement readiness, auto-enrollment opens more Safe Harbor contribution options for employers. Traditional Safe Harbor match formulas start at 4%, but Safe Harbor QACA plans begin at 3.5%. Traditional Safe Harbor formulas are 100% vested immediately. In contrast, QACA (Qualified Automatic Contribution Arrangement) formulas allow for a two-year vesting schedule, which means employees are 0% vested in employer contributions until reaching  two years of service. For practices with higher employee turnover, the vesting schedule encourages longevity, as employees who leave early forfeit matching contributions.

Safe Harbor formula changes must be made as of Jan. 1 and require a 30-day notice to participants. If you are interested in altering your Safe Harbor match or nonelective contribution formula, now is the time to explore it to ensure a timely notice.

4. Is My 401(k) Ready for the New Super Catch-Up?

Starting in 2025, a new contribution limit became available for a small group. Secure Act 2.0 created a super catch-up category for anyone turning ages 60 to 63 during the year. The catch-up limit is $11,250, meaning a participant’s total contribution could be $34,750.

Make sure your practice’s retirement plan is set up to accept the higher contribution limit. If you or any employees are interested in contributing the maximum and are 60 to 63 years old, contribute no later than Dec. 31.

Watch for the release of 2026 contribution limits.

5. Is My Practice’s 401(k) Ready for a Roth Catch-Up?

Beginning in 2026, Secure 2.0 will require all high earners ($145,000 in FICA wages, indexed for inflation each year) to make Roth catch-up contributions. This means catch-up contributions will no longer be tax-deductible for high earners. The rule was scheduled to go into effect in 2024 but was postponed for two years.

Confirm that your plan is ready for the change and allows Roth contributions for all employees. If not, work with your provider to update the plan documents. Otherwise, catch-up contributions will not be permitted.

You also need to work with your payroll processor to ensure its system can process Roth contributions in general as well as Roth catch-ups. Ideally, the payroll system will proactively identify the high earners.

With so many changes in the retirement plan space, having a fiduciary advisor at your side is helpful. Your adviser should keep you abreast of what’s new, review your situation regularly, and help you adjust your plan over time to meet your needs.